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By Mark Milke
and Ven Venkatachalam
Canadian Energy Centre

The killing of the cross-border Keystone XL pipeline due to anti-oil activism and politics will change nothing about worldwide oil demand. All it does is hand an advantage to Canada’s competitors.

Worldwide oil consumption has been on an upward trajectory, and with the COVID-19 pandemic subsiding in much of the world, resumption in demand will soon be obvious this year and next.

Mark Milke

Mark Milke

With consumption data going back to 1997 and a forecast to 2022 from the U.S. Energy Information Administration, consider some relevant statistics about the quarter-century trend.

In 1997, worldwide oil consumption was 72.1 million barrels daily. That demand grew steadily, including through 9/11, and reached a new high of 86.7 million barrels daily in 2008. The Great Recession stalled consumption growth a bit, dropping by 900,000 barrels daily in 2009 to 85.8 million daily barrels.

Post-recession, worldwide consumption grew again from 88.7 million barrels in 2010 to a new high of 100.9 million barrels daily in 2019. In 2020, demand dropped to 92.3 million barrels as the pandemic hit and as governments and businesses shut down much of the world economy.

However, the EIA forecast for this year is 97.7 barrels of oil consumed daily, with 101.4 million barrels of oil used daily in 2022. If the U.S. forecast is correct, by next year worldwide oil consumption will again hit new daily highs. As of 2022, half a million more barrels of oil per day will be used by consumers, businesses and governments than in the previous peak year in 2019.

But as smart investors often remark, past performance is no guarantee of future returns.

Ven Venkatachalam

Ven Venkatachalam

And for oil, plenty of politicians, pundits and even the International Energy Agency not only predict but are working toward oil’s near-term demand destruction. Thus, the theory goes, there’s no guarantee the next 25 years will look like the past 25 years.

Conversely, they’re not realistically accounting for growing energy demand in Africa and Asia, where dense energy – energy that can physically accomplish much – is needed.

How seriously one takes the claim that oil will soon be on a permanent downslope in part depends on if one believes other energy can replace oil and natural gas any time soon.

One reason to think the parade of opinion on oil’s imminent demise is wrong comes from Vaclav Smil, University of Manitoba professor of the environment (emeritus). Smil is a leading expert on energy transitions. In his book Energy, Smil noted that before abandoning something as a source of energy, we must consider how little (or much) of that source it takes to produce the outcomes we need.

Smil has also noted that “the reality of energy density in various forms of energy sources (be they oil, natural gas, coal, wind, solar and others) must be accounted for as part of any assumed transition.”

In 2018, Science magazine cited Smil’s point that energy transitions are normally transitions away from “relatively weak, unwieldy energy sources for those that pack a more concentrated punch.” What we’re seeing in current attempts to transition away from fossil fuels does the opposite.

If Smil is correct – and there’s every reason to prefer his independent mind and conclusions derived from hard data over opinions of uninformed convenience – then the next question is: Which countries will extract the oil necessary for 100-million-plus barrels consumed daily?

Keystone XL cancellation a wake up call for Alberta by Franco Terrazzano

If Canada’s oil sector is artificially constrained, multiple other countries will explore for, extract, and export oil.

Canada has the third-largest proved oil reserves at 170 billion barrels, behind Saudi Arabia at 298 billion barrels and Venezuela at 304 billion barrels. The United States has proven reserves of 69 billion barrels (ninth largest in the world).

Assume that one day Canada and the United States exit the oil business. The other top-10 oil-reserve countries will be able to fill whatever supply the world needs.

The remaining eight of the top 10 countries are Libya, the United Arab Emirates, Kuwait, Russia, Iraq, Iran, Saudi Arabia and Venezuela. However, production in the latter has slowed to a crawl since political disruption has made oil production nearly impossible. The combined proven oil reserves of these eight countries are over 1.2 trillion barrels.

With current production in play, Canada has 82 years of oil left. The years left for other countries in the top 10 are: the United States (11 years), Russia (25 years), the United Arab Emirates (67 years), Saudi Arabia (69 years), Iraq (83 years), Kuwait (93 years), Libya (108 years), Iran (121 years) and Venezuela (906 years).

Canada can choose to limit the oil industry or shut it down based on opinions about future demand. Or it can take the approach of Smil to recognize energy density realities. Either way, plenty of other countries will take Canada’s market share if Canada exits the oil business.

Mark Milke and Ven Venkatachalam are with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. They are authors of the report, Worldwide Oil Reserves and Investments: Key Facts.

Mark and Ven are among our contributors. For interview requests, click here.


The views, opinions and positions expressed by columnists and contributors are the authors’ alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

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